What is a Calderbank Offer?
A Calderbank offer (otherwise known as a "Without Prejudice Save as to Costs") is an offer to settle a dispute, putting the other side on notice that, if the dispute goes before any court and the outcome is less favourable to the other side compared to the Calderbank Offer being made, then the side making the offer is entitled to more of their costs being recovered. This is because, if the other side had accepted the offer, then they would have been better off and neither side would have had to spend money taking the matter to court.
The history behind the Calderbank offer goes back to an English case in 1975 between Mr and Mrs Calderbank. It was summed up nicely by the court in a case called Martel:
It was in a legislative vacuum that the English Court of Appeal made its ruling in Calderbank. Mrs. Calderbank was seeking a declaration under the Married Women's Property Act, 1882, not recovery of debt or damages. Before trial, she swore an affidavit declaring herself willing to accept a certain result in the litigation going on between herself and Mr. Calderbank. Mr. Calderbank did not agree and the case went to trial.
The judgment was less favourable to him than what Mrs. Calderbank had been willing to give him. It was held that Mrs. Calderbank was entitled to her costs, as from the date on which she made her willingness to settle known. The Court also suggested that a letter like the one used in this case by the plaintiff should sound in costs. What has become known as a Calderbank letter developed into a recognised procedure to set up an award of costs based on a willingness to settle.
In simple terms, when you make or reject a Calderbank offer, you are taking an educated bet. In terms of employment matters, when an employee makes a Calderbank offer, they are betting that the amount the ERA will award will be more than the employee's offer amount. If the employee is right, then they can apply to have more of their costs paid by the employer. However, should an employer make a Calderbank offer, then they are betting that the ERA will award the employee less than the amount they are offering.
Should the employer be right, then, even though the employee may have won the battle of that case, the employee may actually lose the war as they can have costs awarded against them. This is because the employee would have been better off if they had accepted the employer's offer and the employer would not have had to spend money on defending the claim.
Accordingly, Calderbank offers should not be made or rejected prior to taking employment law advice, as the outcome can have major implications on both sides. Do contact us with further queries you may have on this matter.